New ABS Rules Hit Nonfinancial Firms, Too

By Vincent Ryan
CFO.com

If your company is an asset securitizer — even just an occasional one that doesn't publicly register its issuances — get ready to spend more money and hours on reporting and compliance. New rules proposed by the Securities and Exchange Commission would require issuers of asset-backed securities (ABS), including those doing privately placed deals, to register transactions and provide loan-level data on terms and underwriting, borrower creditworthiness, and characteristics of the property or collateral securing a loan.


The proposed rules are designed "to improve investor protection and promote more efficient asset-backed markets," the SEC says. (Total ABS issuance rose to $34.2 billion in the first quarter of 2010, up from $15.9 billion in Q1 2009 but multiples lower than the quarterly highs the market hit from 2004 to 2007.) The agency estimates that companies publicly disclosing ABS information for the first time would collectively spend an annual total of 214,791 hours gathering the data and disclosing it to investors. A large bulk of the work would probably be done by outside consultants and software programmers, the SEC suggests.

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